An art smuggler has told a jury how he smuggled a $1m (£700,000) sculpture out of Egypt, and allegedly sold it on to a New York art dealer.

Jonathan Tokeley-Parry said he smuggled the sculpture of the head of Amenhotep III - who died in 1375 BC - out of Egypt by dipping it in plastic and painting it black to make it look like a cheap tourist souvenir.

Testifying for the US government in court against Manhattan dealer Frederick Schultz, Mr Tokeley-Parry said he sold the item in 1992 to Manhattan dealer Frederick Schultz for $915,000 (£648,000).

Mr Tokeley-Parry told the district court in Manhattan he had paid around $7,000 (£5,000), thinking it was worth up to $50,000 (£35,000).

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"It was more than I'd ever paid for a piece, but for a piece of this quality it was an extraordinarily low price," he said.

Mr Tokeley-Parry said he smuggled items out of Egypt because the Egyptian government had created a prohibition against the trading of art objects by declaring that all antiquities belonged to the government.

In 1997, he was convicted by a British court of smuggling, and spent three years in prison.

Mr Schultz allegedly resold the head for $1.2m (£850,000) to a London art collector.

His lawyer, Linda Imes, told the jury Mr Schultz had been unaware that the object was a stolen antiquity.

Giving evidence, Mr Tokeley-Parry portrayed the antiquities business in Egypt and England as a cloak-and-dagger affair.

Dealers fought to obtain valuable pieces, and were prepared to punish those they felt had snubbed them, he said.

He said he had been warned by dealers that if they did not get the objects they desired, "they would make it impossible for me, and I'd be arrested".